Wholesalers who compete with their buyers

I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.

That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.

Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.

ncl7_2000 wrote:I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.

That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.

Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.

There is no doubt that the online retail market can be a very confusing and very messy space to try and do business in. You've highlighted in your post how some suppliers are happy to take your cash and then turn around and compete against you.

Some will do so, but will sell at their retail price, which then still gives you space to compete, given your wholesale purchase price discount. The really big problem, and it sounds from your post that this is what you have found with your supplier, that they are undercutting you on price. Essentially burning the candle at both ends by selling to customers wholesale for them to retail and then using avenues such as eBay to unload at wholesale price as well, completing shutting down the market space needed to make any margin on the wholesale purchase.

It's unfortunately far more common than anyone would like. There are, thankfully (as per Tony above) who are ethical traders and do not drop any double plays on you. It's one of the first questions you should really ask any supplier, including Drop-Shippers, if they in fact also have a retail arm or sell their products through other avenues and if yes, have them identify those avenues for you.

Even if they say no, some basic research on the products you are interested in selling will usually identify possible problems you may be facing, whether that involves your supplier or other sellers in your chosen market space.

Drop-Shipping certainly has its advantages, but supply price usually isn't one of them. Not when compared with a genuine Wholesale price. Another thing to watch out for if you do think about going back into wholesale is the MOQ trap.

Many people are attracted to the MOQ minimum to save money, but what most aren't aware of is that the supplier has a staggered wholesale price structure, Meaning, their MOQ price is just the base wholesale price and buying in a larger volume can quite often then secure a bigger discount.

Of course, what happens here is you buy at the MOQ price, then a competitor comes in and buys in a larger volume, securing a better price and then you find you have stock you can't see because your price is not competitive, despite your wholesale price.

So if you ever deal in wholesale, never just focus on the MOQ, always ask what the best price is they offer and what sized volume is required to secure that price. Then you will be fully informed and be able to avoid the MOQ trap, should one be waiting for you to fall into.

In regards to clearing your stock that you ahve. I'm not sure what the product is, but are you able to clear at cost and at least get yoru money back or even take a small hit to liquidate. Getting as much back as possible at least gives you some working capital again, where as having stock you can't make money on just sitting around isn't doing you any good at all.

ncl7_2000 wrote:I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.

That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.

Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.

We deeply agree with your concerns. We have contracted with more than 1,000 factories and sold more than 100,000 products at the factory wholesale price. The target customers are small and medium-sized wholesalers and retailers. We hope to give our customers a clear competitive advantage, so we are constantly adjusting our sales methods to fully distinguish between retail and wholesale.

I’ve been looking for suppliers of the product I’m interested in. I found one that had some of those products. However, their products had brand names of other manufacturers. So I picked one brand and did an independent search and found their website. They had some products that to buy them you needed to go to their retailers, which they listed. Guess who was listed as one of their retailers? That’s right, the supplier I saw here that I was considering as a source for my product. So the “wholesaler” here is not really a wholesaler but a middleman. I can’t get the best price if they are buying from the manufacturer, then turning around and reselling to me.

ncl7_2000 wrote:I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.

That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.

Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.

I think Salehoo is a great drop shipping service, you can use Salehoo labs to find best selling products.additionally you contact their support team to give you some suggestions about products that sells the best and has a great profit, they can narrow your search to only few products that have a large number of impression but low competition.

ncl7_2000 wrote:I’ve been looking for suppliers of the product I’m interested in. I found one that had some of those products. However, their products had brand names of other manufacturers. So I picked one brand and did an independent search and found their website. They had some products that to buy them you needed to go to their retailers, which they listed. Guess who was listed as one of their retailers? That’s right, the supplier I saw here that I was considering as a source for my product. So the “wholesaler” here is not really a wholesaler but a middleman. I can’t get the best price if they are buying from the manufacturer, then turning around and reselling to me.

Hi Norma,

To use your term "middleman" suppliers are very common to find in this field. In fact, the majority of Drop-ship suppliers in many cases can be described as just that.

Manufacturer produces the product, onsells to a large wholesaler to distribute the product. Smaller wholesale buyer comes along and takes X amount of stock and then passes that stock on to retailers through a drop-shop distribution method, who then onsell to the final buyer.

Now, that set up fits within the general description of a middleman supplier, but they are filling a distribution space in the market for people who want to get into the market with very little or in many cases, virtually nothing at all.

If you can avoid dealing with those further down the food chain, then you're always going to get a better deal, the closer you can get to the producer themselves. That, of course, comes down to money. Those with it get the best deals because they fish upstream. Those without it, they fish downstream and the catch is never as good.

So it's really a balance. Everyone wants the best possible value, but value is the keyword because the value you get is dictated by the amount of money you have available.

Now in the circumstance that you highlight here in your post, I'm not quite sure if this is the same situation. You mention this supplier is a retailer, but also refer to them as a middleman. If you could pass on the link to their directory profile for me, I'll follow up to clarify what is happening for you.

ncl7_2000 wrote:I just joined Salehoo recently and I'm disappointed with how "wholesalers" have retail websites that compete with those they are selling to. I had an online business before. I bought all my inventory wholesale. Some of my suppliers, I later found out, were also selling retail. I was really upset after paying the minimum order prices in merchandise. Merchandise, by the way that I could not get rid of and it's still sitting in a spare room in my house. AND I still owe money for that inventory. I can't even get rid of it on Ebay.

That is why I decided to try drop shipping this time. I was lured by the flood of emails and ads about drop shipping and what a great business model it is yada, yada, yada.

Now I read these posts and the story is different. I know the differences between wholesale and drop shipping. I know, for the manufacturer it may be a hassle to package one item vs selling a dozen. But I really expected to find some manufacturers here that really do dropshipping and don't undercut their customers with their retail website.

I just well understand what you mean, Because I'am doing wholesale business for 10 + years. Please take a look at [url]wholesaleclothes.net[/url] ,maybe this is what you are looking for. Original Wholesale Price,by some service fee for purchase and packing for you.